In March 2020, for geopolitical reasons, Russia refused to go on with Saudi Arabia to adjust, along the rule of what is known as the OPEC+ deal, their oil extractions to world demand. It was normal, because there were alerting signs that oil demand might drop due to the coronavirus in China. Moscow refused Ryad’s request to adhere to the production cutbacks in order to support the price. Saudi Arabia, stung to the core, reacted in the opposite way and declared its intention to increase its crude production to more than 10 million barrels per day in April, once the OPEC+ deal will expire at the end of March. In addition, it has announced reducing the price by $6 to $8 a barrel for all its crude to all destinations. The consequence was not long in coming: the price of crude fell to around $32 a barrel. Oil futures suffered their biggest daily loss since 1991 during the Gulf War.
This geopolitical skirmish happens at the wrong moment. The Coronavirus epidemic was killing much more in Europe and USA than in China (officially!). Drastic measures taken everywhere to try to limit the pandemic had radical consequences on economy. In the face of the sharp drop in economic activity, demand for oil is in freefall. It is self-evident: airplanes that don't fly, cars that stay in the garage, deserted restaurants, closed cinema and stadiums, cancelled vacations cause the consumption of petroleum products to plummet. When disruptions occur in a huge market, speculators are quick to try to take advantage of the instability.